UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C.  20549





FORM
10-Q





(Mark
One)


x
              QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
                THE
      SECURITIES EXCHANGE ACT OF 1934FOR
      THE QUARTERLY PERIOD ENDED MARCH 31, 2010
                OR ̈
              TRANSITION
      REPORT UNDER SECTION 13 OR 15 (d) OF
                THE
      SECURITIES EXCHANGE ACT OF 1934





For
the transition period from  to





Commission
File Number:  1-10883





WABASH NATIONAL
CORPORATION


( Exact
name of registrant as specified in its charter)





Delaware
                  (State
      of Incorporation)
                  
                  1000
      Sagamore Parkway South,
                  Lafayette, Indiana
                  (Address
      of Principal
                  Executive
      Offices)
                
                52-1375208
                  (IRS
      Employer
                  Identification
      Number)
                  
                  47905
                  (Zip
      Code)


Registrant’s telephone
number, including area code:  (765) 771-5300





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.


Yes x No  ̈





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files).


Yes o    No  o





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See definitions of “large accelerated filer,” “accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.


Large
      accelerated filer  ̈
              Accelerated
      filer   ̈Non-accelerated
      filer x (Do
      not check if a smaller reporting company)
              Smaller
      reporting company   ̈





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).


Yes  ̈ No x





The
number of shares of common stock outstanding at April 28, 2010 was
31,088,276.





WABASH
NATIONAL CORPORATION





INDEX





FORM
10-Q





PagePART
      I – FINANCIAL INFORMATIONItem
      1.
                        Financial
      StatementsCondensed
      Consolidated Balance Sheets at
                        3March
      31, 2010 and December 31, 2009Condensed
      Consolidated Statements of Operations
                        4for
      the three months ended March 31, 2010 and 2009Condensed
      Consolidated Statements of Cash Flows
                        5for
      the three months ended March 31, 2010 and 2009Notes
      to Condensed Consolidated Financial Statements
                        6Item
      2.
                        Management’s
      Discussion and Analysis of Financial Condition
                        13and
      Results of OperationsItem
      3.
                        Quantitative
      and Qualitative Disclosures about Market Risks
                        23Item
      4.
                        Controls
      and Procedures
                        24PART
      II – OTHER INFORMATIONItem
      1.
                        Legal
      Proceedings
                        24Item
      1A.
                        Risk
      Factors
                        25Item
      6.
                        Exhibits
                        25Signature
                        25




2





WABASH NATIONAL CORPORATION


CONDENSED
CONSOLIDATED BALANCE SHEETS


(Dollars
in thousands)





March 31,
                    
                    
                    December 31,2010
                    
                    
                    2009(Unaudited)ASSETSCURRENT
      ASSETSCash
                    
                    $
                    1,378
                    
                    
                    $
                    1,108Accounts
      receivable, net
                    
                    
                    23,822
                    
                    
                    
                    17,081Inventories
                    
                    
                    74,036
                    
                    
                    
                    51,801Prepaid
      expenses and other
                    
                    
                    7,763
                    
                    
                    
                    6,877Total
      current assets
                    
                    
                    106,999
                    
                    
                    
                    76,867PROPERTY,
      PLANT AND EQUIPMENT, net
                    
                    
                    105,560
                    
                    
                    
                    108,802INTANGIBLE
      ASSETS
                    
                    
                    25,176
                    
                    
                    
                    25,952OTHER
      ASSETS
                    
                    
                    11,312
                    
                    
                    
                    12,156$
                    249,047
                    
                    
                    $
                    223,777LIABILITIES AND STOCKHOLDERS'
      (DEFICIT) EQUITYCURRENT
      LIABILITIESCurrent
      portion of capital lease obligation
                    
                    $
                    337
                    
                    
                    $
                    337Accounts
      payable
                    
                    
                    51,675
                    
                    
                    
                    30,201Other
      accrued liabilities
                    
                    
                    36,129
                    
                    
                    
                    34,583Warrant
                    
                    
                    173,438
                    
                    
                    
                    46,673Total
      current liabilities
                    
                    
                    261,579
                    
                    
                    
                    111,794LONG-TERM
      DEBT
                    
                    
                    42,435
                    
                    
                    
                    28,437CAPITAL
      LEASE OBLIGATION
                    
                    
                    4,384
                    
                    
                    
                    4,469OTHER
      NONCURRENT LIABILITIES AND CONTINGENCIES
                    
                    
                    3,073
                    
                    
                    
                    3,258PREFERRED
      STOCK, net of discount, 25,000,000 shares authorized, $0.01 par value,
      35,000 shares issued and outstanding
                    
                    
                    24,336
                    
                    
                    
                    22,334STOCKHOLDERS'
      (DEFICIT) EQUITYCommon
      stock 75,000,000 shares authorized, $0.01 par value, 30,446,736 and
      30,376,374 shares issued and outstanding, respectively
                    
                    
                    330
                    
                    
                    
                    331Additional
      paid-in capital
                    
                    
                    356,581
                    
                    
                    
                    355,747Retained
      deficit
                    
                    
                    (418,194
                    )
                    
                    
                    (277,116
                    )Treasury
      stock at cost, 1,675,600 common shares
                    
                    
                    (25,477
                    )
                    
                    
                    (25,477
                    )Total
      stockholders' (deficit) equity
                    
                    
                    (86,760
                    )
                    
                    
                    53,485$
                    249,047
                    
                    
                    $
                    223,777





See Notes
to Condensed Consolidated Financial Statements.




3





WABASH NATIONAL CORPORATION


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS


(Dollars
in thousands, except per share amounts)


(Unaudited)





Three Months EndedMarch 31,2010
                
                
                2009NET
      SALES
                
                $
                78,274
                
                
                $
                77,937COST
      OF SALES
                
                
                79,250
                
                
                
                93,413Gross
      profit
                
                
                (976
                )
                
                
                (15,476
                )GENERAL
      AND ADMINISTRATIVE EXPENSES
                
                
                7,715
                
                
                
                8,658SELLING
      EXPENSES
                
                
                2,541
                
                
                
                3,185Loss
      from operations
                
                
                (11,232
                )
                
                
                (27,319
                )OTHER
      INCOME (EXPENSE):Increase
      in fair value of warrant
                
                
                (126,765
                )
                
                
                -Interest
      expense
                
                
                (1,027
                )
                
                
                (1,005
                )Other,
      net
                
                
                32
                
                
                
                55Loss
      before income taxes
                
                
                (138,992
                )
                
                
                (28,269
                )INCOME
      TAX EXPENSE
                
                
                87
                
                
                
                15Net
      loss
                
                $
                (139,079
                )
                
                $
                (28,284
                )PREFERRED
      STOCK DIVIDENDS
                
                $
                1,999
                
                
                $
                -NET
      LOSS APPLICABLE TO COMMON STOCKHOLDERS
                
                $
                (141,078
                )
                
                $
                (28,284
                )BASIC
      AND DILUTED NET LOSS PER SHARE
                
                $
                (4.64
                )
                
                $
                (0.94
                )COMPREHENSIVE
      LOSSNet
      loss
                
                $
                (139,079
                )
                
                $
                (28,284
                )Changes
      in fair value of derivatives, net of tax
                
                
                -
                
                
                
                118NET
      COMPREHENSIVE LOSS
                
                $
                (139,079
                )
                
                $
                (28,166
                )





See Notes
to Condensed Consolidated Financial Statements.




4





WABASH NATIONAL CORPORATION


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


(Dollars
in thousands)


(Unaudited)





Three Months Ended March 31,2010
                
                
                2009Cash
      flows from operating activitiesNet
      loss
                
                $
                (139,079
                )
                
                $
                (28,284
                )Adjustments
      to reconcile net loss to net cash (used in) provided by operating
      activitiesDepreciation
      and amortization
                
                
                4,428
                
                
                
                4,796Increase
      in fair value of warrant
                
                
                126,765
                
                
                
                -Stock-based
      compensation
                
                
                829
                
                
                
                965Changes
      in operating assets and liabilitiesAccounts
      receivable
                
                
                (6,741
                )
                
                
                20,677Inventories
                
                
                (22,235
                )
                
                
                8,278Prepaid
      expenses and other
                
                
                (886
                )
                
                
                1,092Accounts
      payable and accrued liabilities
                
                
                23,020
                
                
                
                (4,724
                )Other,
      net
                
                
                106
                
                
                
                (78
                )Net
      cash (used in) provided by operating activities
                
                $
                (13,793
                )
                
                $
                2,722Cash
      flows from investing activitiesCapital
      expenditures
                
                
                (280
                )
                
                
                (539
                )Proceeds
      from the sale of property, plant and equipment
                
                
                493
                
                
                
                6Net
      cash provided by (used in) investing activities
                
                $
                213
                
                
                $
                (533
                )Cash
      flows from financing activitiesProceeds
      from exercise of stock options
                
                
                16
                
                
                
                -Borrowings
      under revolving credit facilities
                
                
                89,661
                
                
                
                18,529Payments
      under revolving credit facilities
                
                
                (75,663
                )
                
                
                (45,575
                )Principal
      payments under capital lease obligation
                
                
                (85
                )
                
                
                (81
                )Preferred
      stock issuance costs paid
                
                
                (79
                )
                
                
                -Net
      cash provided by (used in) financing activities
                
                $
                13,850
                
                
                $
                (27,127
                )Net
      increase (decrease) in cash and cash equivalents
                
                $
                270
                
                
                $
                (24,938
                )Cash
      and cash equivalents at beginning of period
                
                
                1,108
                
                
                
                29,766Cash
      and cash equivalents at end of period
                
                $
                1,378
                
                
                $
                4,828





See Notes
to Condensed Consolidated Financial Statements




5


WABASH
NATIONAL CORPORATION


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





1.
            DESCRIPTION
      OF THE BUSINESS





The
condensed consolidated financial statements of Wabash National Corporation (the
“Company”) have been prepared without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission (the
“SEC”).  Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations.  In the opinion of management, the accompanying condensed
consolidated financial statements contain all material adjustments (consisting
only of normal recurring adjustments) necessary to present fairly the
consolidated financial position of the Company, its results of operations and
cash flows. The condensed consolidated financial statements included herein
should be read in conjunction with the consolidated financial statements and the
notes thereto included in the Company’s 2009 Annual Report on Form
10-K.




As
discussed in Note 1 to the Company’s 2009 Annual Report on Form 10-K, the year
ending December 31, 2009 was challenging for the trailer industry as the factors
negatively impacting demand for new trailers became more intense and pervasive
across the United States.  According to the most recent A.C.T.
Research Company, LLC (“ACT”) estimates, total trailer industry shipments in
2009 were approximately 80,000, or a decline of 44% from the 143,000 trailers
shipped in 2008 and more than 62% lower than the 213,000 trailers reported for
the year ended December 31, 2007.   These decreases in the demand
for trailers reflected the weakness of truck freight, which trended down since
the latter part of 2006 as a result of general economic conditions and, more
particularly, declines in new home construction and the automotive
industry.  As a result of these significant declines within the
trailer industry, the Company’s revenues, gross profits, financial position and
liquidity for 2009 were all negatively impacted.
 
 In light
of these economic conditions and the decline in the Company’s operating results
and financial condition, in July 2009, the Company entered into a Securities
Purchase Agreement with Trailer Investments, LLC (“Trailer Investments”)
pursuant to which Trailer Investments purchased shares of redeemable preferred
stock for an aggregate purchase price of $35.0 million.  Concurrent
with entering into the Securities Purchase Agreement, the Company entered into a
Third Amended and Restated Loan and Security Agreement (the “Amended Facility”)
with its lenders, effective August 3, 2009, with a maturity date of August 3,
2012.  The Amended Facility amends and restates the Company’s previous
revolving credit facility, and the lenders waived certain events of default that
had occurred under the previous revolving credit facility and waived the right
to receive default interest during the time the events of default had
continued.  In addition to the liquidity generated from both the
Securities Purchase Agreement with Trailer Investments and the Amended Facility,
the Company has been and will continue to aggressively manage its capital
expenditures, cost structure and cash position.  Capital spending for
2009, which was limited to required replacement projects and cost reduction
initiatives, amounted to $1.0 million and is anticipated to be approximately
$2.0 million for 2010.  The Company has also implemented various cost
reduction actions that have substantially decreased its overhead and operating
costs, including reductions in hourly and salary headcount, compensation, and
benefits.  In addition, the Company optimized its operations through
plant, assembly line and warehouse consolidation projects.
 
 While the
Company continues to face uncertainty in 2010 regarding the demand for trailers
in the current economic environment, the overall trailer market for 2010 is
expected to be an improvement from 2009.  According to the most recent
ACT estimates, total trailer industry shipments for 2010 are expected to be up
28% from 2009 to approximately 103,000 units in 2010.  Our backlog of
orders at March 31, 2010 was $295 million, up 115% from our backlog at December
31, 2009 and 157% from the same period in the prior year.  While this
trend in the overall trailer market is encouraging to see, the Company will
proceed with caution as the overall demand levels are expected to be stronger in
the second half of the year as compared to the first half.




2.
            INVENTORIES





Inventories
are stated at lower of cost, determined on the first-in, first-out (FIFO)
method, or market.  The cost of manufactured inventory includes raw
material, labor and overhead.  Inventories consisted of the following
(in thousands):





March 31,
                  
                  
                  December 31,2010
                  
                  
                  2009Raw
      materials and components
                  
                  $
                  20,418
                  
                  
                  $
                  15,280Work
      in progress
                  
                  
                  4,680
                  
                  
                  
                  386Finished
      goods
                  
                  
                  36,997
                  
                  
                  
                  26,920Aftermarket
      parts
                  
                  
                  3,624
                  
                  
                  
                  4,072Used
      trailers
                  
                  
                  8,317
                  
                  
                  
                  5,143$
                  74,036
                  
                  
                  $
                  51,801





3.
            ISSUANCE
      OF PREFERRED STOCK AND WARRANT





In July
2009, the Company entered into a Securities Purchase Agreement (the “Securities
Purchase Agreement”) with Trailer Investments pursuant to which Trailer
Investments purchased 20,000 shares of Series E redeemable preferred stock
(“Series E Preferred”), 5,000 shares of Series F redeemable preferred stock
(“Series F Preferred”), and 10,000 shares of Series G redeemable preferred stock
(“Series G Preferred”, and together with the Series E Preferred and the Series F
Preferred, the “Preferred Stock”) for an aggregate purchase price of $35.0
million.  Trailer Investments also received a warrant that is
exercisable at $0.01 per share for 24,762,636 newly issued shares of the
Company’s common stock representing, on August 3, 2009, the date the warrant was
delivered, 44.21% of the Company’s issued and outstanding common stock after
giving effect to the issuance of the shares underlying the warrant, subject to
upward adjustment to maintain that percentage if currently outstanding options
are exercised.  Pursuant to these terms, due to shares issued upon the
exercise of stock options during the first quarter of 2010 the warrant is now
exercisable for an additional 3,541 shares, or 24,766,177 shares in the
aggregate.  The number of shares of common stock subject to the
warrant is also subject to upward adjustment to an amount equivalent to 49.99%
of the issued and outstanding common stock of the Company outstanding
immediately after the closing after giving effect to the issuance of the shares
underlying the warrant in specified circumstances where the Company loses its
ability to utilize its net operating loss carryforwards, including as a result
of a stockholder of the Company acquiring greater than 5% of the outstanding
common stock of the Company.  Of the aggregate amount of $35.0 million
received, approximately $13.2 million was attributed to the warrant and $21.8
million was attributed to the preferred stock based on the estimated fair values
of these instruments as of the agreement date.  The difference between
the initial value and the liquidation value of the Preferred Stock, including
issuance costs of approximately $2.8 million, will be accreted as preferred
stock dividends over a period of five years using the effective interest
method.




6




The
following table presents the activity for the Preferred Stock (in
thousands):





Series E
                
                
                Series F
                
                
                Series G
                
                
                Total PreferredPreferred
                
                
                Preferred
                
                
                Preferred
                
                
                StockBalance
      as of December 31, 2009
                
                $
                12,984
                
                
                $
                3,190
                
                
                $
                6,160
                
                
                $
                22,334Issuance
      cost adjustment
                
                
                2
                
                
                
                -
                
                
                
                1
                
                
                
                3Accretion
                
                
                288
                
                
                
                73
                
                
                
                152
                
                
                
                513Accrued
      and unpaid dividends
                
                
                793
                
                
                
                212
                
                
                
                481
                
                
                
                1,486Balance
      as of March 31, 2010
                
                $
                14,067
                
                
                $
                3,475
                
                
                $
                6,794
                
                
                $
                24,336





The Series E Preferred, Series F
Preferred and Series G Preferred pay an annual dividend rate of 15%, 16% and
18%, respectively, based on liquidation value.  The dividend on each
series of Preferred Stock is payable quarterly and subject to increase by 0.5%
every quarter if the applicable series of Preferred Stock is still outstanding
after August 3, 2014.  During the first two years following the
issuance of the Preferred Stock, the Company may elect and intends to accrue
these dividends unpaid in which case these unpaid dividends accrue
dividends.  Accordingly, all unpaid accrued dividends through March
31, 2010 have been reflected in Preferred Stock.  The unpaid
dividends, including the additional dividends accrued as a result of previously
unpaid dividends, are not required to be repaid by the Company until redemption
of the Preferred Stock, but are not precluded from being paid prior to
redemption without penalty, at the discretion of the
Company.  Additionally, the Preferred Stock restricts the Company’s
ability to declare or pay cash dividends to its holders of common stock so long
as any shares of the Preferred Stock remain outstanding unless otherwise
approved by the majority of the holders of the outstanding Preferred
Stock.





The
Company may at any time after one year from the date of issuance redeem all or
any portion of the Preferred Stock at a liquidation value of $1,000 per share
plus any accrued and unpaid dividends plus a premium adjustment ranging between
15% and 20% if redemption occurs before August 3, 2014.  The premium
for early redemption would be applied to the sum of the liquidation value and
any accrued and unpaid dividends.





The warrant contains several
conditions, including, among other things, an upward adjustment of shares upon
the occurrence of certain contingent events and an option by the holder to
settle the warrant for cash in event of a specific default.  These
provisions result in the classification of the warrant as a liability that is
adjusted to fair value at each balance sheet date.





The
warrant liability was recorded initially at fair value with subsequent changes
in fair value reflected in earnings.  Estimating fair value of the
warrant requires the use of assumptions and inputs that are observable, either
directly or indirectly, and may, and are likely to, change over the duration of
the warrant with related changes in internal and external market
factors.  In addition, option-based techniques are highly volatile and
sensitive to changes in the trading market price of the Company’s common stock,
which has a high historical volatility.  Since the warrant is
initially and subsequently carried at fair value, the Company’s Statements of
Operations will reflect the volatility in these estimate and assumption
changes.  The fair value of the warrant was estimated using a binomial
valuation model.




7




4.
            FAIR
      VALUE MEASUREMENTS




As of the beginning of the 2008 fiscal
year, the Company adopted the provisions of a statement issued by the FASB on
fair value measurements as it relates to recurring financial assets and
liabilities. As of the beginning of the 2009 fiscal year, the Company adopted
the provisions of this Statement as it relates to nonrecurring fair value
measurement requirements for nonfinancial assets and liabilities.





The
statement establishes a three-level valuation hierarchy for fair value
measurements.  These valuation techniques are based upon the
transparency of inputs (observable and unobservable) to the valuation of an
asset or liability as of the measurement date.  Observable inputs
reflect market data obtained from independent sources, while unobservable inputs
reflect the Company’s market assumptions.  These two types of inputs
create the following fair value hierarchy:





·
              Level
      1 — Valuation is based on quoted prices for identical assets or
      liabilities in active
markets;





·
              Level
      2 — Valuation is based on quoted prices for similar assets or liabilities
      in active markets, or other inputs that are observable for the asset or
      liability, either directly or indirectly, for the full term of the
      financial instrument; and





·
              Level
      3 — Valuation is based upon other unobservable inputs that are significant
      to the fair value
measurement.





The
following table sets forth by level within the fair value hierarchy the
Company’s financial assets and liabilities that were accounted for at fair value
on a recurring basis (in thousands):





March 31, 2010
                  
                  
                  December 31, 2009Level 1
                  
                  
                  Level 2
                  
                  
                  Level 3
                  
                  
                  Total
                  
                  
                  Level 1
                  
                  
                  Level 2
                  
                  
                  Level 3
                  
                  
                  TotalLiabilitiesWarrant
                  
                  $
                  -
                  
                  
                  $
                  173,438
                  
                  
                  $
                  -
                  
                  
                  $
                  173,438
                  
                  
                  $
                  -
                  
                  
                  $
                  46,673
                  
                  
                  $
                  -
                  
                  
                  $
                  46,673





The
carrying amounts of cash and cash equivalents, accounts receivable and accounts
payable reported in the Condensed Consolidated Balance Sheets approximate fair
value.





The fair
value of total borrowings is estimated based on current quoted market prices for
similar issues or debt with the same maturities.  The interest rates
on the Company’s bank borrowings under its Revolving Facility are adjusted
regularly to reflect current market rates and thus carrying value approximates
fair value.





5.
            STOCK-BASED
      COMPENSATION





The
Company recognizes all share-based payments to employees, including grants of
employee stock options, in the financial statements based upon their fair
value.  The Company uses a binomial valuation model, which
incorporates various assumptions including volatility, expected life, dividend
yield and risk-free interest rates, to value new stock option awards it
grants.  The expected life and volatility assumptions are based on the
Company’s historical experience as well as the terms and conditions of stock
option awards granted to employees.




8


The
Company’s policy is to recognize expense for awards subject to graded vesting
using the straight-line attribution method.  The amount of
compensation costs related to nonvested stock options and restricted stock not
yet recognized was $5.1 million at March 31, 2010, for which the expense will be
recognized through 2013.





6.
            CONTINGENCIES





Various
lawsuits, claims and proceedings have been or may be instituted or asserted
against the Company arising in the ordinary course of business, including those
pertaining to product liability, labor and health related matters, successor
liability, environmental matters and possible tax assessments.  While
the amounts claimed could be substantial, the ultimate liability cannot now be
determined because of the considerable uncertainties that
exist.  Therefore, it is possible that results of operations or
liquidity in a particular period could be materially affected by certain
contingencies.  However, based on facts currently available,
management believes that the disposition of matters that are currently pending
or asserted will not have a material adverse effect on the Company's financial
position, liquidity or results of operations.  Costs associated with
the litigation and settlement of legal matters are reported within General and Administrative
Expenses in the Consolidated Statements of Operations.





Brazil
Joint Venture





In March
2001, Bernard Krone Indústria e Comércio de Máquinas Agrícolas Ltda. ("BK")
filed suit against the Company in the Fourth Civil Court of Curitiba in the
State of Paraná, Brazil.  Because of the bankruptcy of BK, this
proceeding is now pending before the Second Civil Court of Bankruptcies and
Creditors Reorganization of Curitiba, State of Paraná (No. 232/99).





The case
grows out of a joint venture agreement between BK and the Company related to
marketing of RoadRailer trailers in Brazil and other areas of South
America.  When BK was placed into the Brazilian equivalent of
bankruptcy late in 2000, the joint venture was dissolved.  BK
subsequently filed its lawsuit against the Company alleging that it was forced
to terminate business with other companies because of the exclusivity and
non-compete clauses purportedly found in the joint venture
agreement.  BK asserts damages of approximately $8.4
million.





The
Company answered the complaint in May 2001, denying any
wrongdoing.  The Company believes that the claims asserted by BK are
without merit and it intends to defend its position.  A trial was held
on March 30, 2010 in Curitiba, Paraná, Brazil.  A ruling on the
evidence presented at the trial is not expected for several
months.   The Company believes that the resolution of this
lawsuit will not have a material adverse effect on its financial position,
liquidity or future results of operations; however, at this stage of the
proceeding no assurances can be given as to the ultimate outcome of the
case.





Intellectual
Property





In
October 2006, the Company filed a patent infringement suit against Vanguard
National Corporation (“Vanguard”) regarding Wabash National’s U.S. Patent Nos.
6,986,546 and 6,220,651 in the U.S. District Court for the Northern District of
Indiana (Civil Action No. 4:06-cv-135).  The Company amended the
Complaint in April 2007.  In May 2007, Vanguard filed its Answer to
the Amended Complaint, along with Counterclaims seeking findings of
non-infringement, invalidity, and unenforceability of the subject
patents.  The Company filed a reply to Vanguard’s counterclaims in May
2007, denying any wrongdoing or merit to the allegations as set forth in the
counterclaims.  The case has currently been stayed by agreement of the
parties while the U.S. Patent and Trademark Office undertakes a reexamination of
U.S. Patent Nos. 6,986,546.  It is unknown when the stay will be
lifted.




9




The
Company believes that the claims asserted by Vanguard are without merit and the
Company intends to defend its position.  The Company believes that the
resolution of this lawsuit and the reexamination proceedings will not have a
material adverse effect on its financial position, liquidity or future results
of operations; however, at this stage of the proceeding, no assurance can be
given as to the ultimate outcome of the case.





Environmental
Disputes





In
September 2003, the Company was noticed as a potentially responsible party (PRP)
by the U.S. Environmental Protection Agency pertaining to the Motorola 52nd
Street, Phoenix, Arizona Superfund Site pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act.  PRPs include
current and former owners and operators of facilities at which hazardous
substances were allegedly disposed.  EPA’s allegation that the Company
was a PRP arises out of the operation of a former branch facility located
approximately five miles from the original site.  The Company does not
expect that these proceedings will have a material adverse effect on the
Company’s financial condition or results of operations.





In
January 2006, the Company received a letter from the North Carolina Department
of Environment and Natural Resources indicating that a site that the Company
formerly owned near Charlotte, North Carolina has been included on the state's
October 2005 Inactive Hazardous Waste Sites Priority List.  The letter
states that the Company was being notified in fulfillment of the state's
“statutory duty” to notify those who own and those who at present are known to
be responsible for each Site on the Priority List.  No action is being
requested from the Company at this time.  The Company does not expect
that this designation will have a material adverse effect on its financial
condition or results of operations.





7.
            NET LOSS PER
      SHARE





Per share
results have been computed based on the average number of common shares
outstanding. The computation of basic and diluted net loss per share is
determined using net loss applicable to common stockholders as the numerator and
the number of shares included in the denominator as follows (in thousands,
except per share amounts):





Three Months Ended March 31,2010
                  
                  
                  2009Net
      loss applicable to common stockholders
                  
                  $
                  (141,078
                  )
                  
                  $
                  (28,284
                  )Basic
      and diluted weighted average common shares outstanding
                  
                  
                  30,432
                  
                  
                  
                  30,050Basic
      and diluted net loss per share
                  
                  $
                  (4.64
                  )
                  
                  $
                  (0.94
                  )





Due to
the losses reported in 2010 and 2009, average diluted shares outstanding for the
three month periods ending March 31, 2010 and 2009 exclude the antidilutive
effects of the following potential common shares (in thousands):





Three Months Ended March 31,2010
                    
                    
                    2009Stock
      options and restricted stock
                    
                    
                    151
                    
                    
                    
                    32Redeemable
      warrants
                    
                    
                    24,701
                    
                    
                    
                    -Options
      to purchase common shares
                    
                    
                    1,706
                    
                    
                    
                    2,119




10


8.
            INCOME
      TAXES





The Company has experienced cumulative
operating losses over the most recent three year period.  After
considering these operating losses and other available evidence, both positive
and negative, management determined that it was necessary to record a full
valuation allowance against its deferred tax assets created during the quarter
ended March 31, 2010.  As a result, the effective income tax expense
for the first quarter of 2010 was less than $0.1 million.





9.
            PRODUCT
      WARRANTIES





The following table presents the
changes in the product warranty accrual included in Other Accrued Liabilities (in
thousands):





2010
                  
                  
                  2009Balance
      as of January 1
                  
                  $
                  14,782
                  
                  
                  $
                  17,027Provision
      for warranties issued in current year
                  
                  
                  224
                  
                  
                  
                  223Additional
      (recovery of) provision for pre-existing warranties
                  
                  
                  (355
                  )
                  
                  
                  70Payments
                  
                  
                  (496
                  )
                  
                  
                  (693
                  )Balance
      as of March 31
                  
                  $
                  14,155
                  
                  
                  $
                  16,627





The
Company offers a limited warranty for its products.  With respect to
Company products manufactured prior to 2005, the limited warranty coverage
period is five years.  Beginning in 2005, the coverage period for
DuraPlate® trailer
panels was extended to ten years, with all other products remaining at five
years.  The Company passes component manufacturers’ warranties on to
its customers.  The Company’s policy is to accrue the estimated cost
of warranty coverage at the time of the sale.




10.
            SEGMENTS




a.  Segment
Reporting





The
Company has two reportable segments: manufacturing and retail and
distribution.  The manufacturing segment produces and sells new
trailers to the retail and distribution segment or to customers who purchase
trailers directly from the Company or through independent
dealers.  The retail and distribution segment includes the sale of new
and used trailers, as well as the sale of after-market parts and service,
through its retail branch network.




11




Reportable
segment information is as follows (in thousands):





Retail and
                
                
                
                
                
                ConsolidatedManufacturing
                
                
                Distribution
                
                
                Eliminations
                
                
                TotalsThree
      Months EndedMarch 31, 2010Net
      salesExternal
      customers
                
                $
                57,334
                
                
                $
                20,940
                
                
                $
                -
                
                
                $
                78,274Intersegment
      sales
                
                
                5,414
                
                
                
                -
                
                
                
                (5,414
                )
                
                
                -Total
      net sales
                
                $
                62,748
                
                
                $
                20,940
                
                
                $
                (5,414
                )
                
                $
                78,274(Loss)
      Income from operations
                
                $
                (10,615
                )
                
                $
                (619
                )
                
                $
                2
                
                
                $
                (11,232
                )Assets
                
                $
                379,638
                
                
                $
                99,226
                
                
                $
                (229,817
                )
                
                $
                249,047





Three
      Months EndedMarch 31, 2009Net
      salesExternal
      customers
                
                $
                57,254
                
                
                $
                20,683
                
                
                $
                -
                
                
                $
                77,937Intersegment
      sales
                
                
                3,384
                
                
                
                -
                
                
                
                (3,384
                )
                
                
                -Total
      net sales
                
                $
                60,638
                
                
                $
                20,683
                
                
                $
                (3,384
                )
                
                $
                77,937(Loss)
      Income from operations
                
                $
                (24,264
                )
                
                $
                (3,106
                )
                
                $
                51
                
                
                $
                (27,319
                )Assets
                
                $
                392,130
                
                
                $
                110,380
                
                
                $
                (230,236
                )
                
                $
                272,274





b.  Product
Information





The
Company offers products primarily in three general categories: new trailers,
used trailers and parts, service and other.  The following table sets
forth the major product categories and their percentage of consolidated net
sales (dollars in thousands):





Three Months Ended March 31,2010
                  
                  
                  2009$
                  
                  
                  %
                  
                  
                  $
                  
                  
                  %New
      trailers
                  
                  
                  59,677
                  
                  
                  
                  76.2
                  
                  
                  
                  60,264
                  
                  
                  
                  77.3Used
      trailers
                  
                  
                  4,690
                  
                  
                  
                  6.0
                  
                  
                  
                  5,507
                  
                  
                  
                  7.1Parts,
      service and other
                  
                  
                  13,907
                  
                  
                  
                  17.8
                  
                  
                  
                  12,166
                  
                  
                  
                  15.6Total
      net sales
                  
                  
                  78,274
                  
                  
                  
                  100.0
                  
                  
                  
                  77,937
                  
                  
                  
                  100.0





11.
            SUBSEQUENT
      EVENT





In May
2009, the FASB issued a Statement on subsequent events.  The Statement
establishes a general standard of accounting for and disclosures of events that
occur after the balance sheet date but before financial statements are issued or
are available to be issued.  Specifically, the Statement sets forth
the period after the balance sheet date during which management should evaluate
events or transactions that may occur for potential recognition or disclosure in
the financial statements, the circumstances under which an entity should
recognize events or transactions occurring after the balance sheet date in its
financial statements, and the disclosures that an entity should make about
events or transactions that occurred after the balance sheet
date.  The requirements of the Statement were effective for interim
and annual financial periods ending after June 15, 2009.  The Company
evaluated its March 31, 2010 consolidated financial statements for subsequent
events through the date that the Company’s consolidated financial statements
were filed with the SEC.  No subsequent events have taken place that
meet the definition of a subsequent event that requires further disclosure in
this filing.




12




ITEM
      2.
            MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS





CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS





This
Quarterly Report of Wabash National Corporation (the “Company”, “Wabash” or
“we”) contains “forward-looking statements” within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act of 1934 (the “Exchange Act”). Forward-looking statements may
include the words “may,” “will,” “estimate,” “intend,” “continue,” “believe,”
“expect,” “plan” or “anticipate” and other similar words. Our “forward-looking
statements” include, but are not limited to, statements regarding:





•
            our
      business plan;





•
            our
      expected revenues, income or loss and capital
  expenditures;





•
            plans
      for future operations;





•
            financing
      needs, plans and liquidity, including for working capital and capital
      expenditures;





•
            our
      ability to achieve sustained
profitability;





•
            reliance
      on certain customers and corporate
  relationships;





•
            availability
      and pricing of raw materials;





•
            availability
      of capital and financing;





•
            dependence
      on industry trends;





•
            the
      outcome of any pending litigation;





•
            export
      sales and new markets;





•
            engineering
      and manufacturing capabilities and
capacity;





•
            acceptance
      of new technology and products;





•
            government
      regulation; and





•
            assumptions
      relating to the foregoing.





Although
we believe that the expectations expressed in our forward-looking statements are
reasonable, actual results could differ materially from those projected or
assumed in our forward-looking statements. Our future financial condition and
results of operations, as well as any forward-looking statements, are subject to
change and are subject to inherent risks and uncertainties, such as those
disclosed in this Quarterly Report.  Important risks and factors that
could cause our actual results to be materially different from our expectations
include the factors that are disclosed in “Item 1A. Risk Factors” in our Form
10-K for the year ended December 31, 2009 and elsewhere herein, including, but
not limited to, Item 1A of Part II hereof. Each forward-looking statement
contained in this Quarterly Report reflects our management’s view only as of the
date on which that forward-looking statement was made.  We are not
obligated to update forward-looking statements or publicly release the result of
any revisions to them to reflect events or circumstances after the date of this
Quarterly Report or to reflect the occurrence of unanticipated
events.




13




RESULTS
OF OPERATIONS





The
following table sets forth certain operating data as a percentage of net sales
for the periods indicated:





Percentage of Net SalesThree
      Months EndedMarch 31,2010
                              
                              
                              2009Net
      sales
                              
                              
                              100.0
                              %
                              
                              
                              100.0
                              %Cost
      of sales
                              
                              
                              101.2
                              
                              
                              
                              119.9Gross
      profit
                              
                              
                              (1.2
                              )
                              
                              
                              (19.9
                              )General
      and administrative expenses
                              
                              
                              9.9
                              
                              
                              
                              11.1Selling
      expenses
                              
                              
                              3.2
                              
                              
                              
                              4.1Loss
      from operations
                              
                              
                              (14.3
                              )
                              
                              
                              (35.1
                              )Increase
      in fair value of warrant
                              
                              
                              (162.0
                              )
                              
                              
                              -Interest
      expense
                              
                              
                              (1.3
                              )
                              
                              
                              (1.3
                              )Loss
      before income taxes
                              
                              
                              (177.6
                              )
                              
                              
                              (36.4
                              )Income
      tax expense
                              
                              
                              0.1
                              
                              
                              
                              -Net
      loss
                              
                              
                              (177.7
                              )%
                              
                              
                              (36.4
                              )%





In the
three month period ended March 31, 2010, we recorded net sales of $78.3 million
compared to $77.9 million in the prior year period.  Net sales were
comparable to the previous year period as the slight decline in new and used
trailers was offset by increases in our parts and services business resulting
from the increased sales ofportable
storage containers, the penetration of use of our DuraPlate®
composite into the truck body market, and the sale of DuraPlate® panels
for other industrial applications.  Gross profit margin was negative
1.2% in the first quarter of 2010 compared to a negative 19.9% in the first
quarter of 2009.  This improvement in gross profit was driven by
increased production levels, improved raw material and component costs as well
as lower overhead costs as compared to the prior year
period.  While we are encouraged to see signs of improvement in the
overall trailer market in the first quarter of 2010 as compared to the prior
year period, we are proceeding with caution based on our expectation that the
overall demand levels are expected to be stronger in the second half of the year
as compared to the first half.  In addition, based on the current low
demand environment, pricing competition had and will continue to have an adverse
impact on our margins as manufacturers compete for limited opportunities in
order to fill under-utilized capacity.  Operating income was
positively impacted by a decrease in general and administrative and selling
expenses compared to the 2009 period due to a reduction in headcount and
salaries, employee related expenses and other various discretionary cost
reductions.  These expense reductions are primarily a result of our
cost cutting initiatives and efforts to adjust our cost structure to match the
current market demand.  Included in other income and expense is a
$126.8 million non-cash charge relating to the quarterly fair value adjustment
of our warrant issued to Trailer Investments, LLC (“Trailer Investments”) as a
part of the Securities Purchase Agreement entered into in July
2009.




14




Our
management team continues to be focused on rightsizing our operations to match
the current demand environment, implementing our cost savings initiatives,
strengthening our capital structure, developing innovative products, positioning
the Company to optimize profits as the industry recovers and selecting product
introductions that meet the needs of our customers.





As a
recognized industry leader, we continue to focus on product innovation, lean
manufacturing, strategic sourcing and workforce rationalization in order to
strengthen our industry position and improve operating results.





Three Months Ended March 31,
2010





Net
Sales





Net sales in the first quarter of 2010
increased $0.3 million, or 0.4%, compared to the first quarter of
2009.  By business segment, net external sales and related units sold
were as follows (dollars in millions):





Three Months Ended March 31,2010
                          
                          
                          2009
                          
                          
                          % ChangeSales
      by segmentManufacturing
                          
                          $
                          57.4
                          
                          
                          $
                          57.3
                          
                          
                          
                          0.2Retail
      and distribution
                          
                          
                          20.9
                          
                          
                          
                          20.6
                          
                          
                          
                          1.5Total
                          
                          $
                          78.3
                          
                          
                          $
                          77.9
                          
                          
                          
                          0.5(units)New
      trailer unitsManufacturing
                          
                          
                          2,300
                          
                          
                          
                          2,500
                          
                          
                          
                          (8.0
                          )Retail
      and distribution
                          
                          
                          300
                          
                          
                          
                          200
                          
                          
                          
                          50.0Total
                          
                          
                          2,600
                          
                          
                          
                          2,700
                          
                          
                          
                          (3.7
                          )Used
      trailer units
                          
                          
                          700
                          
                          
                          
                          900
                          
                          
                          
                          (22.2
                          )





Manufacturing
segment sales were $57.3 million in the first quarter of 2010, an increase of
$0.1 million, or less than 1.0%, compared to the first quarter of
2009.  New trailer sales volume decreased by 200 units, or 8.0%,
compared to the prior year period.  This decrease in new trailer sales
volume for the quarter was offset by higher average selling prices compared to
the prior year period due to favorable customer and product mix as well as
increased sales of our portable storage containers and penetration of use of our
DuraPlate®
composite into the truck body market.





Retail
and distribution segment sales were $20.9 million in the first quarter of 2010,
up $0.3 million, or 1.2% compared to the prior year first quarter. New
trailer sales increased $1.4 million, or 21.5%, due to a 50.0% increase in
volumes.  Used trailer sales were down $0.8 million, or 14.8%,
primarily due to a 22.2% reduction in volumes.  Parts and service
sales were down $0.3 million, or 3.3%.




15


Cost
of Sales





Cost of sales for the first quarter of
2010 was $79.3 million, a decrease of $14.2 million, or 15.2% compared to the
first quarter of 2009.  As a percentage of net sales, cost of sales
was 101.2% in the first quarter of 2010 compared to 119.9% in the first quarter
of 2009.





Manufacturing
segment cost of sales, as detailed in the following table, was $59.6 million for
the first quarter of 2010, a decrease of $12.5 million, or 17.3%, compared to
the 2009 period.  As a percentage of net sales, cost of sales was
103.8% in the first quarter of 2010 compared to 125.8% in the 2009
period.





Three Months Ended March 31,Manufacturing Segment
                        
                        2010
                        
                        
                        2009(dollars in millions)% of Net
                          Sales
                        
                        
                        
                        
                        
                        % of Net
                          SalesMaterial
      Costs
                        
                        $
                        42.5
                        
                        
                        
                        74.0
                        %
                        
                        $
                        45.7
                        
                        
                        
                        79.8
                        %Other
      Manufacturing Costs
                        
                        
                        17.1
                        
                        
                        
                        29.8
                        %
                        
                        
                        26.4
                        
                        
                        
                        46.0
                        %$
                        59.6
                        
                        
                        
                        103.8
                        %
                        
                        $
                        72.1
                        
                        
                        
                        125.8
                        %





As shown
in the table above, cost of sales is composed of material costs, a variable
expense, and other manufacturing costs, comprised of both fixed and variable
expenses, including direct and indirect labor, outbound freight, and overhead
expenses.  Material costs were 74.0% of net sales compared to 79.8% in
the 2009 period.  The 5.8% decrease results from decreases in raw
material commodity and component costs, primarily steel and
aluminum.  In addition, our other manufacturing costs decreased from
46.0% of net sales in the first quarter of 2009 to 29.8% in the 2010
period.  The 16.2% decrease is primarily due to approximately 900 more
new trailers produced in the current quarter and lower overhead costs as
compared to the prior year quarter.





Retail
and distribution segment cost of sales was $19.6 million in the first quarter of
2010, a decrease of $1.7 million, or 8.2%, compared to the 2009
period.  As a percentage of net sales, cost of sales was 93.6% in the
first quarter of 2010 compared to 103.2% in the 2009 period.  This
decrease was primarily the result of valuation reserves recognized in the prior
period and a $0.7 million reduction in direct labor and overhead
expenses.





Gross
Profit





Gross
profit was negative $1.0 million in the first quarter of 2010, an improvement of
$14.5 million from the prior year period. Gross profit as a percent of sales was
negative 1.2% for the quarter compared to a negative 19.9% for the same period
in 2009.  Gross profit by segment was as follows (in
millions):




Three Months Ended March 31,2010
                    
                    
                    2009Gross
      profit by segmentManufacturing
                    
                    $
                    (2.3
                    )
                    
                    $
                    (14.8
                    )Retail
      and distribution
                    
                    
                    1.3
                    
                    
                    
                    (0.8
                    )Eliminations
                    
                    
                    -
                    
                    
                    
                    0.1Total
      gross profit
                    
                    $
                    (1.0
                    )
                    
                    $
                    (15.5
                    )




16




The
manufacturing segment lost $2.3 million in gross profit in the first quarter of
2010, an improvement of $12.5 million from the previous year period, as
relatively flat net sales were more than offset by improved production levels,
reduced commodity and component costs and lower labor and burden
expenses.





Retail
and distribution segment gross profit in the first quarter of 2010 was $1.3
million, an increase of $2.1 million compared to the 2009
period.  Gross profit as a percentage of sales was 6.2% compared to a
negative 3.9% for the prior year period primarily due to increased new trailer
volumes and prior year period valuations charges for used trailers not repeated
in the current year period.





General
and Administrative Expenses





General
and administrative expenses decreased $0.9 million, or 10.9%, to $7.7 million in
the first quarter of 2010 compared to the prior year period.  This
decrease was the result of our cost cutting initiatives to adjust our cost
structure to match the current market demand.  These initiatives
resulted in a $0.7 million reduction in salaries and employee related costs due
to headcount and base pay reductions made in the prior year as well as a $0.1
million reduction in other discretionary costs.





Selling
Expenses





Selling
expenses were $2.5 million in the first quarter of 2010, a decrease of $0.6
million, or 20.2%, compared to the prior year period.  This decrease
was the result of our cost cutting initiatives to adjust our cost structure to
match the current market demand.  These initiatives resulted in a $0.6
million reduction in salaries and employee related costs due to headcount and
base pay reductions made in the prior year.





Other
Income (Expense)





Increase in fair value of
warrant of $126.8 million represents the expense recognized as a result
of the fair value adjustment for the warrant issued to Trailer Investments as a
part of the Securities Purchase Agreement entered into in July 2009. The change
in the fair value of the warrant was driven by the increase in our stock price
during the quarter.





Income
Taxes





We have experienced cumulative
operating losses over the most recent three year period.  After
considering these operating losses and other available evidence, both positive
and negative, we have recorded a full valuation allowance against our deferred
tax assets created during the quarter ended March 31, 2010.  As a
result, the income tax expense for the first quarter of 2010 was less than $0.1
million.




17




Liquidity and Capital
Resources





Capital
Structure





In July 2009, we entered into a
Securities Purchase Agreement with Trailer Investments pursuant to which Trailer
Investments purchased 20,000 shares of Series E Preferred, 5,000 shares of
Series F Preferred, and 10,000 shares of Series G Preferred for an aggregate
purchase price of $35.0 million.  Trailer Investments also received a
warrant that is exercisable at $0.01 per share for 24,762,636 newly issued
shares of our common stock representing, on August 3, 2009, the date the warrant
was delivered, 44.21% of our issued and outstanding common stock after giving
effect to the issuance of the shares underlying the warrant, subject to upward
adjustment to maintain that percentage if currently outstanding options are
exercised.  Pursuant to these terms, due to shares issued upon the
exercise of stock options during the first quarter of 2010 the warrant is now
exercisable for an additional 3,541 shares, or 24,766,177 shares in the
aggregate.  The number of shares of common stock subject to the
warrant is also subject to upward adjustment to an amount equivalent to 49.99%
of the common stock outstanding immediately after the closing of the
transactions contemplated by the Securities Purchase Agreement, after giving
effect to the issuance of the shares underlying the warrant in specified
circumstances where we lose the ability to utilize our net operating loss
carryforwards, including as a result of a stockholder acquiring greater than 5%
of our outstanding common stock.  Of the aggregate amount of $35.0
million received, approximately $13.2 million was attributed to the warrant and
$21.8 million was attributed to the preferred stock based on the estimated fair
values of these instruments as of the date of issuance.  The
difference between the initial value and the liquidation value of the Preferred
Stock, including issuance costs of approximately $2.8 million, will be accreted
as preferred stock dividends over a period of five years using the effective
interest method.





The Series E Preferred, Series F
Preferred and Series G Preferred pay an annual dividend rate of 15%, 16% and
18%, respectively, based on liquidation value.  The dividend on each
series of Preferred Stock is payable quarterly and subject to increase by 0.5%
every quarter if the applicable series of Preferred Stock is still outstanding
after August 3, 2014.  During the first two years following the
issuance of the Preferred Stock, we may elect to accrue these dividends unpaid
in which case these unpaid dividends accrue dividends.  Accordingly,
the unpaid accrued dividends as of December 31, 2009 have been reflected in
Preferred Stock on our consolidated balance sheet.  The unpaid
dividends, including the additional dividends accrued as a result of previously
unpaid dividends, are not required to be repaid until redemption of the
Preferred Stock, but is not precluded from being paid prior to redemption
without penalty, at our discretion.  Additionally, the Preferred Stock
restricts our ability to declare or pay cash dividends to the holders of common
stock so long as any shares of the Preferred Stock remain outstanding unless
otherwise approved by the majority of the holders of the outstanding Preferred
Stock.





The Preferred Stock also provides the
holders with certain rights including an increase in the dividend rate upon the
occurrence of any event of noncompliance.





We may at any time after one year from
the date of issuance redeem all or any portion of the Preferred Stock with a
liquidation value of $1,000 per share including a premium adjustment ranging
between 15% and 20% if redemption occurs before August 3, 2014.  The
premium for early redemption would be applied to the sum of the liquidation
value and any accrued and unpaid dividends.





Upon occurrence of a change of control
of the Company, including if more than 50% of the voting power is transferred or
acquired by any person other than Trailer Investments and its affiliates unless
Trailer Investments or its affiliates acquire the Company, the Preferred Stock
becomes immediately redeemable at the election of the holder at the liquidation
value plus a premium of 200% of the sum of the liquidation price plus all
accrued and unpaid dividends for Series E Preferred and Series F Preferred and
at the liquidation value plus a premium of 225% for Series G
Preferred.  The change of control provisions for the Preferred Stock
are subject to a look-back provision, whereby if the shares of Preferred Stock
are redeemed pursuant to the voluntary redemption provisions within 12 months
prior to the occurrence of a change of control, we would still have to pay the
additional amount to the holders of the Preferred Stock that was redeemed so
that such holders would receive the aggregate payments equal to the change of
control redemption amounts.





The warrant contains several
conditions, including, among other things, an upward adjustment of shares upon
the occurrence of certain contingent events and an option by the holder to
settle the warrant for cash in event of a specific default.  These
provisions result in the classification of the warrant as a liability that is
adjusted to fair value at each balance sheet date.   If the
option to settle the warrant for cash is required, it would have a material
adverse impact on our liquidity.




18




The warrant liability was recorded
initially at fair value with subsequent changes in fair value reflected in
earnings.  Estimating fair values of the warrants requires the
development of significant and subjective estimates that may, and are likely to,
change over the duration of the instrument with related changes in internal and
external market factors.  In addition, option-based techniques are
highly volatile and sensitive to changes in the trading market price of our
common stock, which has a high historical volatility.  Since
derivative financial instruments are initially and subsequently carried at fair
value, our Statements of Operations will reflect the volatility in these
estimate and assumption changes.  The fair value of the warrant was
estimated using a binomial valuation model.





In accordance with the Securities
Purchase Agreement, Trailer Investments has the right to nominate five out of
twelve members of our board of directors and as of March 31, 2010 holds four out
of the eleven director positions. Furthermore, Trailer Investments also has the
following rights: rights to information delivery and access to information and
our management team; veto rights over certain significant aspects of our
operations and business, including payments of dividends, issuance of our
securities, incurrence of indebtedness, liquidation and sale of assets, changes
in the size of our board of directors, amendments of organizational documents of
the Company and its subsidiaries and other material actions by the
Company,  subject to certain thresholds and limitations; right of
first refusal to participate in any future private financings; and certain other
customary rights granted to investors in similar transactions. We were also
required to promptly file a registration statement to permit resale of the
warrant shares to the maximum extent possible, and that registration statement
became effective on December 8, 2009.





As of
March 31, 2010, our debt to equity ratio was approximately negative
0.5:1.0.  Our long-term objective is to generate operating cash flows
sufficient to fund normal working capital requirements, to fund capital
expenditures and to be positioned to take advantage of market
opportunities.  For 2010 we expect to fund operating results, working
capital requirements and capital expenditures through cash flows from operations
as well as available borrowings under our Revolving Facility.





Debt
Agreements





Concurrent
with entering into the Securities Purchase Agreement, in July 2009, we entered
into a Third Amended and Restated Loan and Security Agreement (the “Amended
Facility”) with our lenders, effective August 3, 2009, with a maturity date of
August 3, 2012.  The Amended Facility is guaranteed by certain
subsidiaries of ours and secured by substantially all of our
assets.  The Amended Facility has a capacity of $100 million, subject
to a borrowing base, a $12.5 million reserve and other discretionary
reserves.  The Amended Facility amends and restates our previous
revolving credit facility, and our lenders waived certain events of default that
had occurred under the previous revolving credit facility and waived the right
to receive default interest during the time the events of default had
continued.





The
interest rate on borrowings under the Amended Facility from the date of
effectiveness, or August 3, 2009, through July 31, 2010 is LIBOR plus 4.25%
or the prime rate of Bank of America, N.A. (the “Prime Rate”) plus
2.75%.  After July 31, 2010, the interest rate is based upon
average unused availability and will range between LIBOR plus 3.75% to 4.25% or
the Prime Rate plus 2.25% to 2.75%.  We are required to pay a monthly
unused line fee equal to 0.375% times the average daily unused availability
along with other customary fees and expenses of our agent and
lenders.  All interest and fees are paid monthly.




19




The
Amended Facility contains customary representations, warranties, affirmative and
negative covenants, including, without limitation, restrictions on mergers,
dissolutions, acquisitions, indebtedness, affiliate transactions, the occurrence
of liens, payments of subordinated indebtedness, disposition of assets, leases
and changes to organizational documents.





Under the
Amended Facility, we may not repurchase or redeem our common stock and may not
pay cash dividends to our common stockholders until the second anniversary of
the effectiveness of the Amended Facility, or August 3, 2011, and then only if
(i) no default or events of default are then in existence or would be
caused by such purchase, redemption or payment, (ii) immediately after such
purchase, redemption or payment, we have unused availability of at least $40
million, (iii) (A) with respect to cash dividends, the amount of all cash
dividends paid does not exceed $20 million in any fiscal year and (B) with
respect to repurchases and redemptions, the amount of redemptions and
repurchases does not exceed $20 million during the term of the Amended Facility
and (iv) at least 5 business days prior to the purchase, redemption or
payment, any one of our officers has delivered a certificate to our lenders
certifying that the conditions precedent in clauses (i)-(iii) have been
satisfied.  We are, however, permitted to repurchase stock from
employees upon termination of their employment so long as no default or event of
default exists at the time or would be caused by such repurchase and such
repurchases do not exceed $2.5 million in any fiscal year.





In
addition, we may not repurchase or redeem the Preferred Stock and may not pay
cash dividends to the holders of the Preferred Stock until July 1, 2010. At
any time after July 1, 2010 until the second anniversary of the
effectiveness of the Amended Facility, we may pay cash dividends or redeem or
repurchase the Preferred Stock if (i) no default or events of default are
then in existence or would be caused by such purchase, redemption or payment,
(ii) immediately after such purchase, redemption or payment, we have unused
availability of at least $25 million (iii) at least 5 business days prior
to the purchase, redemption or payment, any one of our officers has delivered a
certificate to our lenders certifying that the conditions precedent in clauses
(i)-(iii) have been satisfied and, (iv) in the case of a redemption or
repurchase, a majority of the lenders and the agent consent (such consent not to
be unreasonably withheld).  After the second anniversary of the
effectiveness of the Amended Facility, the unused availability condition
precedent is reduced to $12.5 million.





The
Amended Facility contains customary events of default including, without
limitation, failure to pay obligations when due under the Amended Facility,
false and misleading representations, breaches of covenants (subject in some
instances to cure and grace periods), defaults on certain other indebtedness,
the occurrence of certain uninsured losses, business disruptions for a period of
time that materially adversely affects the capacity to continue business on a
profitable basis, changes of control and the incurrence of certain judgments
that are not stayed, released or discharged within 30 days.





Cash
Flow





Cash used
in operating activities for the three months ended March 31, 2010 was $13.8
million compared to $2.7 million provided by operating activities in the same
period of 2009.  The use of cash from operating activities for the
current year period was the result of $7.1 million of net losses, adjusted for
various non-cash activities, including depreciation, amortization, stock-based
compensation and changes in the fair value of our warrant, coupled with an
increase in our working capital.  Changes in working capital accounted
for a use of cash totaling $6.7 million for the quarter ending March 31, 2010 as
compared to a source of cash totaling $25.2 million for the prior year
period.  The increased production levels in the current year period as
compared to the previous year and the related increase in purchasing activities
have resulted in higher working capital requirements.  Changes in key
working capital accounts for the first quarter of 2010 compared to the prior
year quarter are summarized below (in millions):




20




2010
                  
                  
                  2009
                  
                  
                  ChangeAccounts
      receivable
                  
                  $
                  (6.7
                  )
                  
                  $
                  20.7
                  
                  
                  $
                  (27.4
                  )Inventories
                  
                  
                  (22.2
                  )
                  
                  
                  8.3
                  
                  
                  
                  (30.5
                  )Accounts
      payable and accrued liabilities
                  
                  
                  23.0
                  
                  
                  
                  (4.7
                  )
                  
                  
                  27.7





For the
first quarter of 2010, accounts receivable increased by $6.7 million as compared
to a $20.7 million decrease in 2009. The increase for 2010 was primarily the
result of the timing of shipments.  Days sales outstanding, a measure
of working capital efficiency that measures the amount of time a receivable is
outstanding, increased to approximately 30 days in 2010 compared to 22 days in
2009.  Inventory increased $22.2 million during 2010 compared to a
decrease of $8.3 million in 2009.  Inventory turns, a commonly used
measure of working capital efficiency that measures how quickly inventory turns
per year, was approximately five times in 2010 and seven times in 2009. The
increase in inventory for the 2010 period was due to higher new trailer
inventories and raw materials resulting from increased order levels for 2010 as
compared to 2009.  Used trailer inventories were also higher in the
current year period due to increased trade packages and an increase in higher
priced late model trailers.  Accounts payable and accrued liabilities
increased $23.0 million in 2010 compared to a decrease of $4.7 million in
2009.  The increase in the current year period was also due primarily
to higher production levels. Days payable outstanding, a measure of working
capital efficiency that measures the amount of time a payable is outstanding,
was 59 days for the 2010 period compared to 38 days for the same period last
year.





Investing
activities provided $0.2 million during the first three months of 2010 compared
to using $0.5 million in the prior year period.  The change from the
prior year of $0.7 million was due to limiting capital spending to required
replacement projects and cost reduction initiatives. This is coupled with the
proceeds received from the sale of our Anna, Illinois production facility during
the current year period.





Financing
activities provided $13.9 million during the first three months of 2010 driven
by net  borrowings under our revolving credit facility necessary to
fund working capital requirements and our increased production
levels.





As of
March 31, 2010, our liquidity position, defined as cash on hand and available
borrowing capacity, net of availability reserves as established in our Amended
Facility, amounted to approximately $29.0 million and total debt and capital
lease obligations amounted to approximately $47.2 million.  As a
result of the August 3, 2009 investment and concurrent with our Amended
Facility, we believe our liquidity is adequate to meet our expected operating
results, working capital needs and capital expenditures for 2010.





In light
of current uncertain market and economic conditions, we continue to aggressively
manage our cost structure, capital expenditures and cash position.  We
implemented various cost reduction actions in the previous year that have
provided reductions to our overhead and operating costs, including, reductions
in hourly and salary headcount, compensation and benefits.  In
addition, we have optimized our operations through plant, assembly line and
warehouse consolidation projects.





Shelf
Registration Statement





On April
30, 2010, we filed a shelf registration statement on Form S-3 for the sale from
time to time by us of $150,000,000 in aggregate offering amount of our
securities, including common stock, debt securities, preferred stock, warrants
or any combination of the foregoing.  The registration statement, upon
effectiveness, will also act as a post-effective amendment to the registration
statement on Form S-1, which was initially declared effective by the SEC on
December 8, 2009, and which registers the 24,762,636 shares of our common
stock originally issuable upon exercise of the warrant described above and
issued to Trailer Investments.  The registration statement also will
register the additional 3,541 shares of common stock for which the warrant
currently held by Trailer Investments is now exercisable.  The
registration statement has not yet been declared effective by the
SEC.




21




The net
proceeds from any sales of our securities under the registration statement could
include, among other uses, redemption of all or a portion of our outstanding
preferred stock, repayment of all or a portion of our outstanding indebtedness
or general working capital purposes.





Capital
Expenditures





Capital
spending amounted to approximately $0.3 million for the first three months of
2010 and is anticipated to be approximately $2.0 million in the aggregate for
2010. The spending for 2010 will be limited to the consolidation of our
Transcraft production facilities, required replacement projects and cost
reduction initiatives in efforts to manage cash flows and enhance
liquidity.





Off-Balance
Sheet Transactions





As of March 31, 2010, we had
approximately $2.0 million in operating lease commitments.  We did not
enter into any material off-balance sheet debt or operating lease transactions
during the quarter ended March 31, 2010.





Contractual Obligations and
Commercial Commitments





We have
included a summary of our Contractual Obligations and Commercial Commitments in
our annual report on Form 10-K, for the year ended December 31, 2009 and there
have been no material changes to the summary provided in that
report.





Backlog





Orders
that have been confirmed by customers in writing and can be produced during the
next 18 months are included in backlog. Orders that comprise the backlog may be
subject to changes in quantities, delivery, specifications and terms. Our
backlog of orders was approximately $295 million at March 31, 2010 compared to
$137 million at December 31, 2009 and $115 million at March 31,
2009.  We expect to complete the majority of our existing backlog
orders within the next 12 months.





OUTLOOK





While the
demand environment for trailers is improving, as evidenced by our backlog, we
remain cautious as to its sustainability.  According to the most
recent A.C.T. Research Company, LLC (“ACT”) estimates, total trailer industry
shipments for 2010 are expected to be up 28% from 2009 to approximately 103,000
units.  By product type, ACT is estimating that van trailer shipments
will be up approximately 40% in 2010 compared to 2009.  ACT is
forecasting that platform trailer shipments will grow approximately 6% and dump
trailer shipments will increase approximately 41% in 2010.  For 2011,
ACT estimates that shipments will grow approximately 64% to a total of 169,000
units.  Downside concerns for 2010 relate to continued issues with the
global economy, unemployment, tight credit markets, as well as depressed housing
and construction-related markets in the U.S.  Taking into
consideration recent economic and industry forecasts, as well as discussions
with customers and suppliers, management expects demand for new trailers to
improve as we move through 2010 and the economy continues to
improve.  Even so, the trailer industry will continue to be challenged
and, although our financial condition is expected to improve with increased
volume, we expect to incur net losses in 2010, which will further reduce our
stockholders’ equity.




22




We
believe we are well-positioned for long-term growth in the industry because: (1)
our core customers are among the dominant participants in the trucking industry;
(2) our DuraPlate® trailer
continues to have increased market acceptance; (3) our focus is on developing
solutions that reduce our customers’ trailer maintenance costs; and (4) we
expect some expansion of our presence into the mid-market carriers.
 
 While our
expectations for industry volumes are generally in line with those of ACT,
pricing will continue to be difficult in 2010 due to overcapacity and fierce
competitive activity.  In addition, raw material and component costs
are expected to rise as overall demand will drive an increase in prices as the
economy improves.  As has been our policy, we will endeavor to pass
along raw material and component price increases to our customers.  We
have a focus on continuing to develop innovative new products that both add
value to our customers’ operations and allow us to continue to differentiate our
products from the competition in order to return to profitability.
 
 Based on
industry forecasts, conversations with our customers regarding their current
requirements and our existing backlog of orders, we estimate that for the full
year 2010 total new trailers sold will be between 18,000 and 22,000, an increase
from 2009 of 41% and 72%, respectively.
 
 CRITICAL
ACCOUNTING POLICIES AND ESTIMATES
 
 We have included a summary of our
Critical Accounting Policies and Estimates in our annual report on Form 10-K,
for the year ended December 31, 2009.  There have been no material
changes to the summary provided in that report.
  ITEM 3.
                QUANTITATIVE AND
      QUALITATIVE DISCLOSURES ABOUT MARKET
  RISKS
  In
addition to the risks inherent in our operations, we have exposure to financial
and market risk resulting from volatility in commodity prices and interest
rates. The following discussion provides additional detail regarding our
exposure to these risks.
 
 Commodity
Prices
 
 We are
exposed to fluctuations in commodity prices through the purchase of raw
materials that are processed from commodities such as aluminum, steel, wood and
polyethylene.  Given the historical volatility of certain commodity
prices, this exposure can materially impact product
costs.  Historically, we have managed aluminum price changes by
entering into fixed price contracts with our suppliers.  As of March 31,
2010, we had $14.2 million in raw material purchase commitments through December
2010 for materials that will be used in the production process.  We
typically do not set prices for our products more than 45-90 days in advance of
our commodity purchases and can, subject to competitive market conditions, take
into account the cost of the commodity in setting our prices for each
order.  To the extent that we are unable to offset the increased
commodity costs in product prices, our results would be materially and adversely
affected.
  23
  Interest
Rates
 
 As of
March 31, 2010, we had $42.4 million of floating rate debt outstanding under our
revolving facility.  A hypothetical 100 basis-point change in the
floating interest rate from the current level would result in a corresponding
$0.4 million change in interest expense over a one-year period.  This
sensitivity analysis does not account for the change in the competitive
environment indirectly related to the change in interest rates and the potential
managerial action taken in response to these changes.
 
 ITEM 4.
              CONTROLS AND
      PROCEDURES
 
 Disclosure
Controls and Procedures
 
 Based on
an evaluation under the supervision and with the participation of the Company’s
management, the Company’s principal executive officer and principal financial
officer have concluded that the Company’s disclosure controls and procedures (as
defined in Rules 14a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended (the “Exchange Act”)) were effective as of March 31,
2010.
 
 Changes
in Internal Controls
 
 There were no changes in the Company’s
internal control over financial reporting, as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act, during the first quarter of fiscal 2010 that
have materially affected or are reasonably likely to materially affect the
Company’s internal control over financial reporting.
 
 PART
II - OTHER INFORMATION
 
 ITEM 1.
              LEGAL
      PROCEEDINGS
 
 In March
2001, Bernard Krone Indústria e Comércio de Máquinas Agrícolas Ltda. ("BK")
filed suit against the Company in the Fourth Civil Court of Curitiba in the
State of Paraná, Brazil.  Because of the bankruptcy of BK, this
proceeding is now pending before the Second Civil Court of Bankruptcies and
Creditors Reorganization of Curitiba, State of Paraná (No. 232/99).
 
 The case
grows out of a joint venture agreement between BK and the Company related to
marketing of RoadRailer trailers in Brazil and other areas of South
America.  When BK was placed into the Brazilian equivalent of
bankruptcy late in 2000, the joint venture was dissolved.  BK
subsequently filed its lawsuit against the Company alleging that it was forced
to terminate business with other companies because of the exclusivity and
non-compete clauses purportedly found in the joint venture
agreement.  BK asserts damages of approximately $8.4
million.
 
 We
answered the complaint in May 2001, denying any wrongdoing.  We
believe that the claims asserted by BK are without merit and it intends to
defend its position.  A trial was held on March 30, 2010 in Curitiba,
Paraná, Brazil.  A ruling on the evidence presented at the trial is
not expected for several months.  We believe that the resolution of
this lawsuit will not have a material adverse effect on our financial position,
liquidity or future results of operations; however, at this stage of the
proceeding no assurances can be given as to the ultimate outcome of the
case.
  24
  ITEM 1A.
                RISK
      FACTORS
  You
should carefully consider the risks described in our Annual Report on Form 10-K,
for the year ended December 31, 2009, including those under the heading “Risk
Factors” appearing in Item 1A of Part I of the Form 10-K, and other information
contained in this Quarterly Report before investing in our
securities.  Realization of any of these risks could have a material
adverse effect on our business, financial condition, cash flows and results of
operations.
  ITEM 6.
                EXHIBITS
  (a)
                Exhibits:
 31.01
                Certification
      of Principal Executive Officer
 31.02
                Certification
      of Principal Financial Officer
 32.01
                Written
      Statement of Chief Executive Officer and Chief Financial Officer Pursuant
      to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section
      1350)
  SIGNATURE
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
  WABASH
      NATIONAL CORPORATIONDate:  May
      4, 2010
                  
                  By:
                  /s/ Mark J. WeberMark
      J. WeberSenior
      Vice President and Chief Financial Officer
                    (Principal
      Financial Officer)
  25